Mortgage Terms & Conditions

marathonic

Bank of Irelands recent action on tracker mortgages should act as a wake up call to those who are planning to take, or have already taken out a mortgage.

Go through your mortgage terms and conditions with a fine tooth comb. If you are on a rate that would not be available to you on the open market today, then chances are that the bank are losing money.

If the bank are losing money and there is a potential get-out clause in your mortgage terms, start planning for an increase, even if it never comes.

With some BOI customers on 0.89% above base mortgages being moved to a 4.99% rate (from 1.39%), that's a difference of £300 per month in interest for every £100,000 borrowed.

If you are in a position that your current rate is no longer available on the market and see a term in your mortgage contract that could, potentially, be used to push you off your rate, my advice would be to work out the difference in payments if you happened to move to a rate currently available on the market and set aside that difference, or as much of it as you can afford, on a monthly basis.

You should either put it in an ISA or, if possible, overpay your current mortgage. Bank of Ireland are one of the first out the door (I think a couple of building societies have taken similar action already). However, they won't be the last.